Economic crisis puts market research companies to work

Andi Dumitrescu, GfK: The purifying effect of the financial crisis was a wake-up call for many players

Despite the grim outlook and forecasts that indicate a 20percent decline in the market research sector, the head of GfK Romania says the number of clients has increased slightly compared to 2008, which means that more and more companies are beginning to realize the significance and need of a comprehensive market research before making important decisions.

“If in the previous years, companies were letting themselves get carried away, this year they have expressed their concern towards in-depth research over consumer behavior, detailed analyses”, Andi Dumitrescu (photo), managing director of GfK Romania told Wall-Street.

Even if marketing spending, which includes research expenses, have been severely shrunk by the crisis, consumer products manufacturers continued to invest in research. “Our clients operate in various fields – FMCG, telecom, financial, automotive, health, travel, energy and media, but the biggest spenders come from highly competitive sectors, such as FMCG and durable goods – home appliances, telecom, electronics, tech, and DIY”, said the managing director of GfK Romania.

Even if the consumer products sector has been the growth engine for market research companies, there have been clients who showed little interests towards specialized business research services, such as companies that enjoyed ballooning profits in the pre-crisis era, but came out with rumpled balance sheets in crisis: automotive, real estate and insurances.

The first year of crisis also brought a change in the services requested by clients. The financial crisis has changed behavior of consumers who were now forced to reevaluate their spending based on a lower buying power. These changes have lead to an increase in requests for consumer tracking research and for the type of market research that generates ongoing reports for those that permanently track consumer behavior and determine the consumer and purchase behavior. “I think the upward trend for specialized, in-depth analyses will continue”, said Dumitrescu.

The head of GfK Romania also sees the positive side of the crisis, at least in market research. “As in any other sector, cost-cutting policies have been observed in market research as well, but paradoxically, it was a good time for major companies to consolidate their positions. In the end, the financial crisis had a purifying role and brought companies down to earth”, managing director of GfK Romania added.

For this year, the market research company expects revenues of €9 mln, and if profit margins remained at the 2008 levels, the net profit would likely hover near €550,000. GfK employs 130 people in Bucharest and other 210 in Iasi. “Our headcount has increased from a year earlier and we still have jobs to fill, so we will still be recruiting in the remainder of the year”, Dumitrescu said. Nevertheless, the effects of the crisis will be visible next year when GfK’s revenues and profit are expected to fall 10-15% according to own estimates.